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GNA Axles Ltd Directors Report.

The Directors of your Company have pleasure in presenting their 26th Annual Report on
the affairs of the Company together with the Audited Accounts of the Company for the year
ended 31st March, 2019.

CORPORATE OVERVIEW

The Company was incorporated in 1993 and thereafter it transformed from a small auto
components manufacturer to a large Axle Shafts manufacturer and enjoys a formidable
position in both national and global markets. The Company has its corporate headquarters
at Mehtiana in Hoshiarpur Punjab.

FINANCIAL RESULTS AND ANALYSIS

The Financial results for the year are as under:-

र Lakhs

Particulars

Year ended on 31st March, 2019

Year ended on 31st March, 2018

Net operating Revenue

92,827.99

67,013.52

Other Income

40.21

287.50

Profit Before Depreciation, Interest and Tax

14,547.71

10,591.96

Financial Costs

810.43

709.45

Profit before Depreciation and Tax

13,737.28

9,882.51

Depreciation

3,473.21

2,480.03

Profit before Tax

10,264.07

7,402.48

Tax Expense

- Current

3,550.00

2,360.00

- Deferred

127.61

-45.95

Profit after tax

6,586.46

5,088.43

Earnings Per Share

- Basic

30.68

23.70

- Diluted

30.68

23.70

FINANCIAL ANALYSIS AND REVIEWOF OPERATIONS: Sales

Revenue from operations increased by र 25,814.48 Lacs to र 92,827.99 Lacs for
the Fiscal 2019 from र 67,013.51 Lacs for the Fiscal 2018, or an increase of 38.52 %.
Export sales increased by र 19,133.68 Lacs to र 49,164.90 Lacs for the Fiscal
2019 from र 3,0031.22 Lacs for the Fiscal 2018. Domestic net revenue from operations
increased byर 7,181.06 Lacs to र 42,544.94 Lacs in the Fiscal 2019 from
र 27,943.41 in the Fiscal 2017, or an increase of 20.31%. The Increase in revenue was
on account of better demand in the Off Highway and CV segment both in Domestic and Export
Markets.

PROFITABILITY

The company earned Profit before Tax of र 10,264.07 Lacs during the year under
review against र 7,402.48 Lacs for the Fiscal 2018 showing an increase of 38.66%.

Profit after tax increased by र 1,498.03 Lacs to र 6,586.46 Lacs for the
Fiscal 2019 from र 5,088.43 Lacs for the Fiscal 2018, or an increase of 29.44 %.

RESOURCE UTILISATION: Property Plant & Equipment

The property, plant & Equipment (including capital work in progress) as at 31st
March, 2019 were र 24,454.70 Lacs as against previous years value of र
19,069.37 Lacs .

Current Assets

The net current assets as on 31st March, 2019 were

र 19,990.72 Lacs as against र 14,911.89 Lacs in the previous year.

DIVIDEND

The Board of Directors in its meeting held on 12th May 2019 had recommended a dividend
@ 27.50 % i.e of र 2.75/- per Equity Share of र 10/- each (Previous year र
2.00 per Equity Share) to the shareholders of the Company for their consideration and
approval at the ensuing Annual General Meeting of the Company. The dividend @ 27.50 %, if
approved at the forthcoming Annual General Meeting, will result in the outflow of र
590.30 Lacs as Dividend and र 121.34 lacs by way of dividend distribution tax.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as on March

31 2019 stood at Rs. 2146.54 Lacs. During the year under review the Company has not
issued shares or convertible securities or shares with differential voting rights nor has
granted any stock options or sweat equity shares or warrants. None of the Directors of the
Company hold instruments convertible into Equity Shares of the Company as on March 31,
2019.

SUBSIDIARIES, JOINTVE NTURES AND ASSOCIATE COMPANIES

The Company has one subsidiary namely GNA Axles Inc. incorporated in Michhigan USA. The
subsidiary is yet to start its business operations. A statement pursuant to section 129(3)
in form AOC  1 is enclosed asAnnexure 1 to this Report. The Company does not
have any associate or joint venture Company.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with
the relevant Accounting Standards issued by ICAI and forms integral part of their report

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report on the operations of the Company, as
required under SEBI (LODR), Regulations 2015 in provided in a separate section and forms
an integral part of this Report.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE
COMPANY OCCURRED BETWEEN THEE ND OF THE FINANCIAL YEAR UNDER REPORTING AND DATEOF REPORT:

There has been no material changes and commitments which can have an effect on the
position of the Company which have occurred between the end of the financial year under
review and the date of this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

Your company has formulated its Corporate Social Responsibility required under section
135 of the Companies Act, 2013. The Company has identified following thrust areas for CSR:

1. To promote and help in providing healthcare and preventive healthcare facilities to
the people.

2. To promote Education and help in delivering quality education to the society and
students.

4. To take initiative in eradication of hunger, malnutrition, sanitation.

5. To promote women empowerment

6. Any other project / programme pertaining to activities listed in Schedule VII of the
Companies(Corporate Social Responsibility) Rules, 2014 and amendments thereto.

The disclosures under Section 134(3) of the Companies Act, 2013 read with Rule 9 of
Companies (Accounts) Rules2014 i.e. Annual Report on CSR activities for Financial Year
2018-19 is attached herewith inAnnexure 2.

RISK MANAGEMENT

The Board of Directors of the Company had formulated and approved the Risk Management
Policy of the Company under the provisions of the Companies Act 2013 and SEBI (LODR),
Regulations, 2015. The objective of Risk Management at GNA Axles Limited is to create and
protect shareholder value by minimizing threats or losses, and identifying and maximizing
opportunities. An enterprise-wide risk management framework is applied so that effective
management of risks is an integral part of every employees job.

The Risk Management Policy of the Company may be accessed on the Companys Website at
the link:http://gnagroup.com/wp-content/uploads/2015/09/Risk-Management-Policy.pdf

INTERNAL FINANCIAL CONTROL:

The Internal Financial Control systems of the Company with reference to financial
statements are well placed and are commensurate with the size and nature of operations of
the Company. The Statutory Auditors report on the internal financial controls, as required
under section 143 of the Companies Act 2013 forms part of the Independent Auditors Report
as Annexure B.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADEWIT H RELATED PARTIES:

The Company has not entered into any contract or arrangement with related parties
during the period under review expect payment of remuneration to the Executive Directors.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES
ACT, 2013

The Company has not given any loan, provided any guarantee, provided any security or
made any investments u/s 186 of the Companies Act during the financial year 2018-2019.

DIRECTORS

In accordance with provisions of section 152 of the Act and the Articles of Association
of the Company, Mr. Kulwin Seehra, Mr. Jasvinder Singh and Mr. Ranbir Singh Directors of
your Company, retires by rotation at the conclusion of the forthcoming Annual General
Meeting and being eligible, offers themselves for re-appointment. The Board of Directors
recommends their reappointment as Directors at the forthcoming Annual General Meeting.

The Board of Directors of the Company, in its meeting held on 23rd October, 2018 upon
the recommendation of the Nomination & Remuneration Committee had appointed Lt.
General Praveen Bakshi (Retd.) as Additional Independent Director of the Company for a
tenure of 5 years with effect from 23rd October, 2018 for a term of 5 consecutive years.
His appointment as Independent Director of the Company for a period of 5 years is to be
approved by the members in the ensuing Annual General Meeting. The Company has received
requisite notice in writing from a member proposing Lt. Gen.

Praveen Bakshis (Retd.) name for the office of Director. According the Board
recommends the resolution relating to the appointment of Gen. Bakshi (Retd.) for approval
of the members. Brief profile of Gen. Bakshi (Retd.) has been given in the notice
convening Annual General Meeting.

Pursuant to provisions of Section 203 of the Companies Act, 2013, the Company has
designated below mentioned persons as KMPs :-

WholeTime Key Managerial

Personnel of the Company

Designation

Gursaran Singh

Managing Director (MD)

Jasvinder Singh

Jt. Managing Director (Jt. MD)

Ranbir Singh

Whole-Time Director(WTD)

Rakesh Kumar

Chief Financial Officer (CFO)

Gourav Jain

Company Secretary (CS)

There has been no change in the Key Managerial Personnel of the Company during the year
under review.

Declaration under Section 149(6):

The Independent Directors have submitted their disclosures to the Board that they
fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so
as to qualify themselves to be appointed as Independent Directors under the provisions of
the Companies Act, 2013 and read with the relevant rules.

Companys Policy relating to the Directors appointment, Payment of remuneration and
other matters related thereto.

The Board of Directors of the Company had formulated and approved the Nomination and
Remuneration Policy of the Company which includes the criteria determining the
qualifications and other matters as provided under section 178(3) of the Companies Act
2013.

The Nomination and Remuneration Policy of the Company is annexed hereto and forms part
of this report as Annexure 3.

Familiarisation programmes for Board Members:

The Board members are from time to time provided with necessary
documents/policies/internal procedures to get them familiar with the practices of the
Company. The business strategies, performance, global developments, legal& other
updates, compliance reports and other relevant information/ reports etc are being
periodically provided to the Board of Directors.

Board Evaluation:

The Company has put in place the policy for performance evaluation of the Individual
Directors of the company and the Board as a whole including the Chairman of the Company.

The meeting of the Independent Directors of the Company for the year 2018-2019 was held
on 29th March 2019 to evaluate the performance of the Non Independent Directors of the
Company, the Chairman of the Company and Board as a whole. The evaluation was done by
discussing the performance of the Individual Directors and the Board as a whole.

AUDITORS AND AUDITORS REPORT: a. Statutory Auditors

The shareholder of the Company in their 24th Annual General Meeting held on 5th
September, 2017 had appointed M/S Harish & Co., Charted Accountants Jalandhar as
Statutory Auditors of the Company for a period of 5 years. Mr. Harish Kumar Monga, the
prop. of M/S Harish & Co. passed away in February 2019. The Board of Directors of the
Company in their meeting held on March 29, 2019 upon their recomendations of the Audit
Committee recommended the name of M/S Harish & Co, Charted Accountants, Jalandhar, to
the shareholders for their approval for appointment as tatutory auditors of the Company.
The shareholders in their extra ordinary general meeting held on April 29, 2019 appointed
M/S Harish & Co. Charted Accountants as Statutory Auditors of the Company till next
Annual General Meeting of the Company As, the tenure of M/S Harish & Co, Charted
Accountants as the Statutory Auditors of the Company is going to end at the conclusion of
the ensuing AGM of the Company, the Board of Directors of the Company in their meeting
held on 12th July, 2019, upon the recommendation of the Audit Committee, had appointed M/S
Harish & Co. Charted Accountants, Jalandhar as Statutory Auditors of the Company for a
term of 5 years from the conclusion of 26th AGM of the Company till the conclusion of 31st
AGM of the Company, subject to the approval of the shareholders of the Company in the
ensuring Annual General Meeting to be held on August 23, 2019. The board recommends the
appointment of M/S Harish & Co., Charted Accountants, Jalandhar as Statutory Auditors
of the Company for a tenure of 5 years.

Further, the Statutory Auditors of the Company M/S Harish & Co. have submitted
Auditors Report on the Standalone and Consolidated accounts of the Company for the
Financial year ended March 31, 2019. The Auditors Report is self explanatory and do not
call for any comments.

b. Secretarial Auditor

M/s H.K & Associates , Practicing Company Secretaries, were appointed as
Secretarial Auditor for the year 2018-19. The Report of the Secretarial Auditor in form no
MR-3 is annexed to this Report. The Secretarial Audit Report is self explanatory and do
not call for any comments. The Secretarial Audit Report forms part of this report as
Annexure 4.

Pursuant to provisions of section 177 (9) of the Companies Act, 2013, the Company has
established a "Vigil Mechanism" incorporating Vigil Mechanism Policy which also
incorporates the Whistle Blower Policy in terms of rule 7 of the Companies (Meetings of
Board and its Powers) Rules, 2014 for employees and Directors of the Company, for
expressing the genuine concerns of unethical behavior, frauds or violation of the codes of
conduct. The Company has also provided adequate safeguards against victimization of
employees and Directors who express their concerns. The Policy on Vigil Mechanism as
approved by the Board of Directors can be accessed on the Companys website at the link:
http://gnagroup.com/wp-content/uploads/2015/09/VIGIL-MECHANISM-POLICY.pdf

CORPORATE GOVERNANCE

A Separate section on Corporate Governance forms an integral part of this Annual Report
of the Company. The Statutory Auditors of the Company have given their certificate
regarding the compliance of the conditions of Corporate Governance as stipulated under the
SEBI (LODR) Regulations, 2015 and the same is annexed to the report on Corporate
Governance.

ENERGY CONSERVATION, TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGEEARNINGS & OUTGO:

Conservation of energy has been a major area of emphasis of your Company and every
effort is made to achieve the optimumutilizationofenergyincarryingoutthemanufacturing
processes. Particulars with respect to conservation of energy and other areas as per
section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 are provided in Annexure 5.

ANNUAL RETURN

In terms of the provisions of section 92(3) of the Companies Act, 2013 read with
Companies (Amendment) Act 2017 and the relevant rules made thereunder, a copy of the
Annual Return as prescribed under Section 92 of the Companies Act, 2013 as amended shall
be made available at the website of the Company www.gnagroup.com under the link http://
gnagroup.com/wp-content/uploads/2019/09/Annual Return 2018-2019.pdf

HUMAN RESOURCES/INDUS TRIAL RELATIONS:

For your Company its Human Resources are its most important assets. It has been the
endeavor of the Company to attract and retain talent. Performance management is the key
word for the Company. The Industrial relations have been peaceful and harmonious in both
the plants of the Company during the year under review. As on 31st March 2019 1201
personnel were employed by the Company.

PERSONNEL & RELATED INFORMATION:

The disclosures required under section 197(12) of the Companies Act 2013 and Rule 5 of
the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are
annexed as Annexure 6 and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors of the company
confirm that:

1. In the preparation of the annual accounts, the applicable Accounting Standards have
been followed;

2. Appropriate accounting policies have been selected and applied consistently, and
have made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company at the end of the financial year and of
the profit or loss of the Company for that period;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 2013 for safe guarding the
assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts have been prepared on a going concern basis.

5. The Board of Director of the Company has Laid down internal financial controls to be
followed by the Company and such internal financial controls are adequate and were
operating effectively.

6. Devised proper systems to ensure compliance with the provisions of all applicable
laws and those systems were adequate and operating effectively.

GENERAL DISCLOSURES:

Your directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions on these items during the year under review:

1. Details of joint venture or associate company.

2. Issue of equity shares with differential rights to dividend, voting or otherwise.

3. Details relating to the deposits covered under Chapter V of the Companies Act 2013.

4. No significant/material orders have been passed by any Regulator/Court /Tribunal
which could impact the going concern status & future operations of the Company.

5. No change in nature of Business of the Company.

6. There was no instance of fraud during year under review which require the Statutory
Auditors to report to the Audit Committee/Board of Directors under section 143(12) of the
Act and rules framed there under.

ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their appreciation to the Shareholders,
Government Authorities, Financial Institutions, Bankers and other Statutory Authorities
for their continued and valuable support to the Company.

Your Directors express their deep gratitude and appreciation to the employees at all
levels for their continued and devoted services and sincere efforts. The Company feels
confident of continued cooperation and efforts from them in future also.

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